Abell Foundation joins suit against Ford over hybrid patents

The Abell Foundation, best known for its charitable work battling poverty in Baltimore, went to court this week over a very different venture: designing hybrid engines for vehicles.

Over the past 15 years, the foundation quietly became a player in the future of automobile development. It invested more than $25 million in Paice, a Baltimore firm that invented a way to improve the performance of combined gas/electric engines but in recent years has spent considerable time in court.

After developing a prototype hybrid-powered car, Paice tried to interest the world's major automakers in its designs, but none struck a deal.

As manufacturers launched their own hybrids, however, lawyers for Paice and Abell say some of those models rely on the ideas of the company's founder, Soviet emigre Alexander Severinsky.

"It's our view that Dr. Severinsky came up with essentially the secret sauce," said Ruffin Cordell, a lawyer for Paice.

Paice has defended its patents in court before, winning a case against Toyota and arriving at settlement deals with that company and Ford in the past. It has another case open in Baltimore against South Korean auto manufacturers Hyundai and Kia.

In a 50-page federal complaint, lawyers for Abell and Paice allege that Ford spent many years exploring a partnership with Paice before deciding instead to develop its own hybrid engine. At that point, Paice alleged that Ford knew enough about its ideas to put them to use.

"Ford built its new hybrid system by relying heavily on the hybrid vehicle inventions it learned from Paice," according to the complaint. "Ford had concluded that to build a commercially viable hybrid, it must use Paice's fundamental patented technology and teachings."

Neither Ford nor a law firm listed for it in court records responded to a request for comment.

Severinsky arrived in the United States in the late 1970s, a time of soaring gas prices and lines of people waiting to fill their tanks — a situation not all that different from the one he left behind in the Soviet Union.

He figured that using batteries to power a car could bring prices down and end the lines. After tinkering for years, Severinsky debuted his prototype hybrid, a Cadillac DeVille, in 1999. It doubled the fuel efficiency of a gas-only DeVille.

The Abell Foundation invested in Paice, providing what Cordell called "lifeblood funding," hoping the company might bring manufacturing jobs to Baltimore. It now owns a share of the company's patents.

Robert C. Embry, president of the Abell Foundation, said investing in startups is an important part of the charity's work, and that it backed Paice to help it develop its green technology.

"We thought that cars were consuming too much gasoline and that they were polluting too much and that this was a technology that would address both very important issues," Embry said.

Both Ford and Toyota also were working on hybrids in the late 1990s, according to the suit. But their early designs struggled to match the performance of traditional gas engines, which meant they were not commercially viable, Cordell said.

Paice's technology, the company argues, offered a solution by using a much higher-voltage electric motor and improving transitions between gas and electric power.

Paice has been involved in court battles over its patents for most of the last decade. It began by fighting with Toyota over the Prius. The little company, which has an office in the same downtown Baltimore building as the Abell Foundation, won a $4.3 million payout in court in 2005.

Then in July 2010, the two firms entered a confidential settlement, ending a new round of litigation over other models. In a joint statement announcing the deal, the companies agreed that Toyota had developed its technology independently.

Earlier that month, Paice also reached an agreement with Ford over one of its patents. As part of that deal, the companies agreed not to return to court until 2014.

Ford's sales of hybrid and electric vehicles have soared, more than doubling to 85,919 last year from 33,476 in 2012.

In the meantime, Paice and Abell sued Korean car makers Hyundai and Kia, alleging they too infringed on its patents. In court papers, the Korean firms have denied the claims and questioned the validity of the patents. An attorney for the companies could not be reached.

Despite the Abell Foundation's high hopes that Paice would be a job creator, Cordell said that the legal battles have consumed so many resources that the company it is able to do little more than fight in court these days.

But its victories so far and licensing agreements have provided Abell Foundation with some revenue. And Cordell said the company is only fighting in court because it has to.

"They would very much like to return to being a technology company and get out of the litigation business," he said.